Case Note & Summary
The petitioners, who were directors of Hindustan Lever Limited, filed a writ petition seeking quashing of a criminal complaint filed by the respondent, Pawan Gulzarilal Chopra, Director of Skipper Foods Pvt. Ltd., under Section 138 of the Negotiable Instruments Act, 1881. The complaint alleged that a cheque issued by Hindustan Lever Limited was dishonoured. The petitioners contended that the complaint did not contain any specific averment that they were in charge of and responsible for the conduct of the business of the company at the time of the offence, which is essential to attract vicarious liability under Section 141 of the Act. The respondent argued that the directors were liable as they were responsible for the company's affairs. The court examined the complaint and found that it merely named the petitioners as directors without stating their role or responsibility. Relying on precedents, the court held that without specific averments, vicarious liability cannot be imposed. The court quashed the complaint and the order issuing process against the petitioners, exercising its inherent powers under Section 482 of the Code of Criminal Procedure, 1973 to prevent abuse of process.
Headnote
A) Criminal Law - Negotiable Instruments Act - Section 138 - Vicarious Liability of Directors - Complaint lacking specific averment that directors were in charge of and responsible for conduct of business at the time of offence is liable to be quashed - Held that mere mention of directors in complaint without stating their role and responsibility is insufficient to attract vicarious liability (Paras 10-15). B) Criminal Procedure Code - Section 482 - Inherent Powers - Quashing of Complaint - Where complaint does not disclose essential ingredients of offence, continuation of proceedings amounts to abuse of process of court - Held that High Court can exercise inherent powers to quash such complaint to prevent miscarriage of justice (Paras 16-20).
Issue of Consideration
Whether the criminal complaint under Section 138 of the Negotiable Instruments Act, 1881 against the directors of a company can be quashed when the complaint does not contain specific averments that the directors were in charge of and responsible for the conduct of the business of the company at the time of the offence.
Final Decision
The court allowed the writ petition, quashed Complaint Case No. 34/SW/2004 and the order issuing process dated 04.02.2004 and bailable warrants dated 03.09.2004 against the petitioners.
Law Points
- Vicarious liability of directors under Section 138 of Negotiable Instruments Act
- 1881 requires specific averment that the director was in charge of and responsible for conduct of business at the time of offence
- Quashing of criminal proceedings when complaint lacks essential ingredients
- Section 482 CrPC inherent powers to prevent abuse of process
